New equity fund to tap opportunities in Chinese economy

Dubai April 15 (IANS) Dubai International Capital (DIC), the international investment arm of the Dubai government, and leading Chinese equity firm First Eastern Investment Group launched a new fund to target opportunities in China’s growing economy. Called China Dubai Capital, it will invest in a wide range of sectors, including infrastructure, resources, healthcare and services.

“Through this fund, we will invest in feasible and profitable business opportunities in commercially-attractive sectors,” DIC executive chairman and chief executive Sameer Al Ansari said in a statement.

“The establishment of China Dubai Capital provides investors the opportunity to participate in a vehicle which will generate superior returns.”

The first closing of the fund will take place in May 2008 with at least $500 million from investors predominantly in Asia and the Gulf Cooperation Council countries.

The final closing is expected to take place in October bringing the fund up to $1 billion. First Eastern currently manages over $1.5 billion dedicated to direct investments in China.

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Dubai chamber dubs World Bank report inaccurate

The Dubai Chamber of Commerce and Industry branded as inaccurate a report by the World Bank Group ranking the UAE 68th out of 178 nations worldwide on the ease of doing business index.

“The UAE (United Arab Emirates) is not a typical business environment and, therefore, the sample used in constructing the index does not accurately reflect the true structure of the economy and the true ease of doing business in the UAE,” the Khaleej Times reported quoting Dubai Chamber’s economic bulletin for this month.

According to the Dubai chamber, the report erred in using only Emirati citizens and Dubai residents in the sample for the UAE ranking, thus excluding some 80 percent of the country’s population and the differences within the other emirates.

The report also ignored companies operating through free zones, whose tenants make up the bulk of foreign direct investments (FDI) in the UAE.

It said the two other factors that led to inaccuracies in the World Bank report were the exclusion of family-owned businesses and those engaged in trading whereas 75 percent of the UAE businesses are into trading.

“This limits the usefulness of the Index…as it does not provide a realistic indication of the ease of doing business to external investors,” Dubai Chamber stated.

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Gulf’s high growth rates to stay: expert

The rising inflation in the Gulf is a symptom of economic expansion in the region and the region’s growth rates are sustainable in the medium term, even if the US and Europe together should experience a general slowdown and oil prices take a beating, according to a top economist at leading index provider Standard & Poor’s (S&P).

Stating that pegging the region’s currencies to the plunging dollar does not make any economic sense, S&P chief economist David Wyss said: “Importing US monetary policy at this juncture would mean importing inflation.”

With most of the Gulf economies set to grow at near double-digit rates, inflation will remain a longer-term problem, but rising food prices are likely to worsen the overall situation, he was quoted as saying by the Gulf News.

He added that being import dependent economies, the Gulf countries would have to resort to subsidies to weather inflationary pressures.

The Gulf states are expected to clock more than $400 billion worth of trade surpluses this year.

With such surpluses on hand, some subsidies will not make a big dent on the regional governments’ balance sheets, he said.

Wyss expected oil to remain a wild card for all global economies and expects it to fall in the short to medium term.

“I am not predicting a collapse of oil. But personally, I feel it could decline to $90 a barrel by the fourth quarter. The current oil prices are mostly supported by speculative positions largely due to hedging against the stock market. Any US stock market revival can mean unwinding of a lot of speculative positions on oil, resulting in a decline in oil prices,” he said.